Provident Solutions – Debt Relief Service Contract Review

A tipster (send in your tips here) sent me a copy of a Provident Services client agreement for debt elimination. According to the Provident Solutions website, the company is “a Document Preparation company.” – Source

Below I’ll pull out some sections of the client contract and give you my opinion on the section.

“This contract (the “Agreement”) is an agreement for document preparation and arbitration support between Provident Solutions, a corporation organized under the laws of California located in San Diego, California”

California does have a registered company named Provident Solutions, Inc. The company was founded 12-27-2018 and states it is located at 1359 Enchanted Way, San Mateo, CA. – Source

“Upon execution of this Agreement, We will prepare for review and modification as needed documents seeking to eliminate each Debt You enroll with us and have listed in Paragraph 1 5. The documents were created by a law firm who has lawyers admitted to practice all over the US including the State where You live. Our role is to take those documents and prepare them with the information You provide to Us.”

It appears the service is debt elimination and you will see later that initial and ongoing monthly fees are charged. It does not appear that legal representation exists for the client only that the general documents were created by a law firm.

“The initial documents for each Debt will likely be sent sequentially and not simultaneously based upon a time table We determine. No document demanding arbitration will be prepared for, and We may not accept into the program, any Debt that prior to enrollment with Us is in litigation status or a Debt we know or believe the underlying Agreement with the original Creditor does not contain an arbitration clause. We make no promise as to when any initial document will be sent.”

It seems that the service extends beyond just a simple document preparation service since the company will make decisions on how to proceed with debt accounts, not driven by the client.

“Depending upon Your individual circumstances, the initial document for each Debt will generally first request the Creditor to substantiate that the Debt is still collectible pursuant to provisions contained in the FDC.PA and/or similar state laws and that the statute of limitations on that Debt has not run out.”

It looks like a general debt validation request. But I’m not clear on how this would work on a debt that has been paid on time and is actively being repaid.

“Each document is written under Your name and is being sent by You. In connection with each document, We are preparing the document and acting as a delivery agent. Your signature on this Agreement is however Your authorization with Your approval for Us to send documents under Your name to an Original Creditor, Debt Buyer and/or a collection agency assigned to a particular Debt.”

So the client is giving the company permission to create and generate letters to creditors, collectors, or debt buyers without client approval. Or so it seems.

“Since We are not a law firm, We will not interpret the wording in any response. If the language in the response Setter is not self-explanatory, at a supplemental charge, You will have the option to have a lawyer admitted in Your State review the language and provide an opinion.”

“Other than sending out the documents on Your behalf, We will not engage in any form of communication with any Creditor or collection agency.”

The client appears to be on their own with the creditor, debt buyer, or collector.

“If the Creditor at any time validates the Debt pursuant to the provisions of the FDCPA, does not respond or cannot validate the Debt but refuses to eliminate it, We will refer You and the particular situation to an approved law firm for Arbitration Services.”

These services appear to be at an additional charge.

“All of Our work in connection with Arbitration will be performed under the supervision of Your Arbitration Counsel. We will serve as the conduit for all communications between You and Your Arbitration Counsel and will provide complete paralegal, administrative and other support services for Your Arbitration Counsel relating to You and any proposed arbitration. We will only provide the service if the Arbitration is on Our approved list and is willing to work with Us.”

It appears to state Provident Solutions will be paid to communicate with the attorney the client hires instead of the attorney talking to the client directly. That seems horribly inefficient. I have no idea what an “approved list” contains.

“Since We are not a law firm, We cannot file any arbitration nor provide advice regarding Arbitration. However, We can provide the support to the Arbitration Counsel on each possible Arbitration. This support will Include preparing the petition for review and modification by the Arbitration Counsel as well as handling all of the functions in the arbitration process that do not require a lawyer. If after the. Arbitration filing takes place with respect to a particular Debt, the Creditor is still unwilling to write off the Debt, there are several different paths for You to pursue. The first such path is to move forward with the Arbitration and await the final outcome of the. Arbitration. The second path is with the Arbitration pending is to try to have a Debt Settlement provider negotiate a less than full balance resolution on the particular Debt. We will serve as the conduit for all communications between You and Your Debt Settlement provider relating to any Debt Settlement Services.”

It appears if debt validation is not successful they move onto some sort of arbitration approach for some undetermined reason. The client is responsible for the costs of this arbitration. There does not appear to be any statement made regarding the success rate for this approach. Provident Solutions looks as if they are going to prepare the arbitration request and that will not be prepared by the attorney representing the client.

It seems the hope is the creditor will write off the debt following an arbitration request application. But simply writing off debt can result in a tax liability to the client and the debt may still be owed. The client agreement does not say the debt is legally eliminated. And if the debt is not written off then the client appears to be referred to a settlement provider and will again be a communication interface between the settlement provider and the client. I wonder if Provident Solutions is standing in between the client for a financial gain because why be a communication conduit if you are just a document preparation company?

“If you file a complaint that turns out to be inaccurate or false with the media, a regulatory, enforcement, or consumer group, You will issue a formal written retraction stating it was a mistake and withdraw the complaint. Failure to do so, will subject you to liquidated damages of $1,000 per complaint.”

That seems pretty extreme and I’m not even sure if that is enforceable. But with an F BBB rating, that seems pretty bold.

The client agreement goes on to say their services are not guaranteed and there may be consequences such as:

Yet the very first step of the process seems to be a request for the collector or creditor to validate the debt.

They even say this on their website, “Our procedure requests a forensic audit of the account which collectors are trying to make you pay; we require your collector to provide validation, verification, and proof of their legal authority to collect from you.” – Source

“We are not a Debt Relief Agency as defined by the Bankruptcy Reform Act of 2005 and do not provide Debt Relief Services as defined in regulations promulgated by the US Federal Trade Commission.”

I wonder if the FTC might have a different opinion on that since they define, “a “debt relief service” as a program that claims directly, or implies, that it can renegotiate, settle, or in some way change the terms of a person’s debt to an unsecured creditor or debt collector. That includes reducing the balance, interest rates or fees a person owes.” – Source

So What Does This Cost?

This client agreement has two creditors, one is American Express which is known to quickly sue. The total debt is $19,820.74 and the fee charged is $9,773.30.

The client agreement goes on to give a mailing address for Provident Solutions of 325 E. Business 60, Dexter, MO but the state of Missouri has no company registered to do business under that name.

I also can’t locate a Google Map street view using that address.

The client in this agreement is paying $9,773 for a service that if they wanted to fie a Chapter 7 bankruptcy and were eligible, for less than about $2,000 they could legally eliminate their debt in less than 90 days tax-free.

Is this approach by Provident Solutions a good solution for consumers? Only the individual consumer can make that determination for themselves by doing their own research.

I would recommend that anyone considering using such a company should read the following free guides.